CONSENT CALENDAR, July 15, 1997
Subject:  BOYCOTT AGAINST NIGERIA

RECOMMENDATION

That if Council chooses to adopt a Resolution establishing a policy prohibiting the City from contracting with or purchasing from those who do business in or with Nigeria, that the following conditions be applied:

1. Authorize the continuance of the Chevron credit cards currently held by the City until such time as an acceptable alternative can be identified and implemented;

2. Direct the City Manager to report back in three (3) months on the progress of locating acceptable alternatives to the Chevron credit cards, and on policy implementation dependent on identifying a reliable data base which lists companies who may be doing business in or with Nigeria.

3. Direct that the prohibition not be applied to the renewals of existing contracts. 4. Direct the City Manager to return next week with an appropriate resolution reflecting the above.

Background

The Peace and Justice Commission at their meeting of February 3, 1997 discussed the issue of military repression and human rights violations in Nigeria. The Peace and Justice Commission further recommended that the City of Berkeley establish a policy prohibiting contracts for personal services with those who do business in or with Nigeria, and prohibiting the purchase of commodities produced in Nigeria or provided by those who do business in or with Nigeria.

Five (5) major corporations have been identified by citizen advocates as companies who are currently doing business in or with Nigeria: Royal Dutch/Shell, Chevron, Mobile Oil, Coca Cola and Bank of America. The City currently has Chevron Oil credit cards. These credit cards are for official city business only. They are used by City staff when they are out of town or used in emergencies when the City fuel tanks are being repaired or out of order. The City cannot secure other gasoline credit cards, from Texaco, UNOCAL (Union Oil) or Atlantic Richfield (ARCO) as they are restricted by resolution 57,881-N.S., the Burma resolution. It would not be in the City of Berkeley's best interest to cancel the Chevron credit cards until an adequate replacement can be identified and secured. The impact could lead to emergency vehicles and other city owned vehicles not being able to purchase fuel when needed.

The City of Berkeley currently purchases its bulk gasoline and diesel from Golden Gate Petroleum, a petroleum broker. Golden Gate Petroleum by Resolution No. 50,961 -N. S. and resultant contract number 9029, has provided fuel to the City of Berkeley's fuel storage tanks at the Corporation Yard as well as the Transfer Station and seven outlying Fire Stations since 1981. Gas pumps are utilized for fueling City owned vehicles.

The City of Berkeley has contacted Golden Gate Petroleum and asked if Council adopts a policy regarding purchases of commodities produced in Nigeria or provided by those who do business in or with Nigeria, would Golden Gate refrain from utilizing Shell Oil Company, Mobil Oil and Standard Oil of California (Chevron) in supplying fuel to the City of Berkeley (along with Texaco and ARCO). Golden Gate Petroleum stated they would comply with the City's request and prices should not be affected.

The City has been unable to locate a reliable data base which lists other companies who may be doing business in or with Nigeria. Therefore, strict compliance and implementation of the boycott will be extremely difficult. As companies are identified either by the Peace and Justice Commission or other data sources, the City will need to analyze the impact of each potentially excluded vendor on a case by case basis.

FINANCIAL IMPLICATIONS

The actual cost of goods or services is unknown at this time. Once companies are identified and alternative products are found the costs +/- will be determined on a case by case basis. Neither is it possible at this time to identify the "compounding effect" each purchasing restriction might have.

However, we do know that there is a growing cost related to staff time in assuring compliance with the combined resolutions effecting purchasing restrictions on the City. Currently, about .25 FTE of a Buyer and/or clerical position are utilized in reviewing various data bases and legislative history to determine which products and sources are restricted; reviewing departmental purchases to assure that violations are not occurring; and in analyzing and researching comparable products. In some cases, cost can be tracked to the inability to locate comparable products at comparable costs as in the case of Hewlett Packard printers. In other cases, costs can be associated with staff time required to work with citizen advisors, and to document and present purchases that are not in keeping with the Council-approved purchasing restrictions such as the recent item related to Motorola communication equipment for the Public Safety building.

There is another cost associated with not being able to purchase items which are known to be cost effective and/or of a certain quality and reliability. This is becoming a significant factor with the enactment of this restriction related to Nigeria. By passing this and previous resolutions, Council has excluded the purchase of products from ARCO, UNOCAL, Texaco, Chevron, Mobil and Shell. Exxon was included under Council action related to the adoption of the Valdez Principle.

As a result of these various actions, it is possible that the City will be limited to purchasing "off-brand"gasoline which may be of a lower quality. This is particularly true in times of gasoline shortages or emergencies. If so, there is the potential for damage to fleet engines and other equipment which increases downtime of the vehicles and the cost of maintenance and repair.

Finally, the City must subscribe to a reliable database for companies doing business in or with excluded countries (Burma, Tibet and now Nigeria.) To the best of our knowledge, a database related to Nigeria does not yet exist. Staff has been informed a that local elected official is attempting to arrange a pool of funds to fund the development of a Nigerian-related database by Investor Responsibility Research Center in Washington DC at a cost of about $15,000. This firm currently supplies the list for Burma. Should Council decide to participate in this effort, it is estimated that this development project could cost the City of Berkeley up to $2,000 depending how many other entities might join the effort. Currently, Oakland, San Francisco and Cambridge (MA) are other cities with some form of purchasing restrictions related to Nigeria.